Harbor Acquisition Corporation Signs Definitive Agreement to Acquire Elmet Technologies, Inc

Business Wire, Oct 17, 2006

BOSTON & LEWISTON, Maine -- Harbor Acquisition Corp. (AMEX: HAC, HAC-U, HAC-WT) ("Harbor") and Elmet Technologies, Inc. ("Elmet") of Lewiston, Maine, announced today that they have signed a definitive Stock Purchase Agreement for Harbor to acquire Elmet for a combination of cash and Harbor stock. Elmet is a privately held, fully-integrated manufacturer of custom designed and engineered Advanced Enabling Materials* products. The acquisition will provide Elmet with access to additional capital to meet the anticipated increased market demand for Elmet's molybdenum and tungsten-based component solutions for high technology OEM applications. Elmet's Advanced Enabling Materials products are used in flat-panel displays, medical imaging devices, MP3 players and DVRs, as well as lighting products.

Following consummation of the acquisition, Elmet's current management team, led by Jack Jensen, CEO, will continue to lead the organization, with the company's operations remaining in Lewiston.

John Carson, Chairman of Harbor stated, "We are very excited about this transaction due to Elmet's strong management team and growth potential. Since its management buy-out in 2004, Elmet has focused on providing high-tech solutions to its customers and is well-positioned to capitalize on the growth of the Advanced Enabling Materials market."

Jack Jensen, CEO of Elmet, remarked, "Our rapid growth and successes since becoming an independent company encouraged us to seek a sophisticated financial partner that would appreciate and support our strong culture of design, quality, and customer service. Having access to capital through the public markets with Harbor, along with our skilled and dedicated workforce and a singular focus on continuing to implement Elmet's growth plan, provides us with the optimal alternative for assuring the Company's continued success in serving its world-class set of customers."

Summary of the Transaction

Under the terms of the acquisition agreement, Harbor will purchase Elmet for an initial payment of approximately 2.191 million shares of Harbor common stock and approximately $108.9 million in cash, which includes repayment of Elmet's existing indebtedness, subject to certain closing adjustments and escrow funding.

The Elmet stockholders will also be entitled to receive a potential earnout payment of up to $28 million based on Elmet achieving minimum EBITDA (as defined in the Stock Purchase Agreement) thresholds, payable 60% in cash and 40% in shares of Harbor common stock:

* Target EBITDA for the earnout in 2007 is $21 million (100% payout of earnout amount), $18 million (50% payout of earnout amount), between $18 and $21 million, the earnout is prorated.

* In the event the earnout is not fully earned in 2007, target EBITDA for 2007/2008 combined is $39 million (100% payout of remaining earnout amount), $37 million (50% payout of remaining earnout amount), between $37 and $39 million, the remaining earnout is prorated.

Following the completion of the transaction, the Harbor board of directors will consist of eight members, four members who are current directors of Harbor, two members from Elmet and two members to be designated by Elmet and subject to Harbor's acceptance.

The closing of the acquisition is subject to customary closing conditions, including approval of the acquisition agreement by the stockholders of Harbor. In addition, the closing is conditioned on holders of less than 20% of the shares of Harbor common stock voting against the acquisition and electing to convert their Harbor common stock into cash from the trust fund established in connection with Harbor's initial public offering.

Elmet Technologies, Inc. Overview

Originally founded in 1929, Elmet became an independent company in late 2003 when its current CEO Jack Jensen led the management buyout of Elmet from its former parent, Philips Electronics North America Corporation. Under Jensen and his management team, Elmet has enjoyed growth by providing innovative refractory metal solutions to OEMs serving such industries as data storage, semiconductor, medical, electronics and lighting. Elmet now employs approximately 230 highly-skilled sales, design, engineering, and production professionals at its Lewiston, Maine headquarters. Elmet's products are typically custom-engineered components used in products such as medical imaging devices, silicon wafer chip manufacturing equipment, and specialty commercial and residential lighting applications.

Since 2003, the Company has streamlined its operations, focused its engineering team on new product development, invested in advanced technological equipment and shifted its product focus to high-value "mission critical" consumable components. Elmet is among the select few companies with the fully-integrated capability to transform tungsten and molybedenum into engineered materials, which have emerged as crucial components for key end market customers. The need to optimize the performance of high-growth product categories, such as flat panel displays, data storage devices, and medical imaging devices, is the key driver in demand for these highly specialized Advanced Enabling Materials.